RRJ Capital Pours $80M into China’s AAB

RRJ Capital, a $2.4 billion Asian private equity firm, and a unit of Hong Kong’s Cheung Kong, has poured $80 million into AAB, a Chinese maker of baby diapers, Reuters reported. AAB China does around 70 percent of its sales in China and 30 percent overseas, Reuters wrote.

(Reuters) – RRJ Capital, the newly formed $2.4 billion Asian private equity firm, and a unit of Hong Kong’s Cheung Kong conglomerate has invested $80 million in AAB, a Chinese maker of baby diapers, according to a source with direct knowledge of the matter.

While small in dollar terms, the deal points to a larger trend occurring across Greater China.

Fast growing Chinese companies, that since early 2009 could raise money through the Hong Kong and mainland stock markets, are turning instead to private equity capital, as lending sources tighten and the IPO window slams shut.

The transaction is also RRJ founder Richard Ong’s fourth deal with his new fund and his first one since bringing his brother Charles into the firm from Singapore state investor Temasek.

The Malaysian born Ong brothers — Richard formerly of Goldman Sachs and Hopu, and Charles of Temasek and Lazard — are two of the region’s best known dealmakers, having done billions of dollars worth of transactions in the last few years alone. (To read more about the Ongs, click on ID:nL4E7K20HL].

The source, who was not authorised to be named because the deal is not yet final, said RRJ invested $50 million, while Cheung Kong’s CK Life Sciences paid $30 million for a stake in the unlisted company.

RRJ declined to comment. AAB and Cheung Kong were not immediately available for comment.

AAB China does around 70 percent of its sales in China and 30 percent overseas, said the source.

The AAB deal highlights a quick deployment of money from Ong’s new fund, having left Hopu in June. Hopu is the successful China-focused private equity fund that wound down after Ong and two co-founders raised more than $2 billion three years ago.

Foreign investors have long sought a stake China’s booming consumer market, with sectors such as Chinese milk producers, juice and spirits makers all subject to overseas interest in the last few years.

(Reporting by Michael Flaherty; Editing by Elaine Hardcastle and Paul Hoskins)